In a major reform step for the cash-trapped railways, the Union Cabinet today approved a proposal to constitute a Rail Tariff Authority (RTA) which will advise the Railway Ministry on fares.
The RTA is crucial for railways as it will recommend fare revision from time to time taking into account input cost and volatile market condition.
However, the RTA's recommendation will not be mandatory for railways as, according to existing law, only the Railway Board, and not any outside body, can fix the tariff.
RTA will be given mandatory powers only after the amendment of the Railway Act, 1989, in Parliament which is unlikely to happen in the UPA-II regime whose term comes to an end in a few months.
The next government will initiate the process of making RTA a mandatory body by amending the Railway Act, 1989 to insert a sub-section called Chapter 5 (A).